The Income Inequality We Ignore

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Over on First Things, Michael W. Hannon, David J. Pederson, and Peter A. Blair write about the injustices of inequality. In many parts of their short article they had me nodding in agreement. But as with much that is written about income and wealth inequality, the article makes assertions that seem to have no basis in economic reality. For instance, the authors seem to claim that income inequality leads to power inequality which “harms civic friendship.”

Charles Murray’s research in Coming Apart supports the views of Aristotle and Aquinas. Here Murray points out that the vast material inequalities between the upper and lower classes have created vast cultural divisions too, one of the consequences of which is that friendship across classes has become less common. By severing the bonds of social solidarity, inequality stratifies society into income-classes that either come into conflict or remain hermetically sealed off from each other.

Inequality also leads to negative consequences in our physical, psychological, and social flourishing. In The Impact of Inequality, for instance, Richard Wilkinson provides extensive sociological evidence that increasing inequality in societies is linked to lower levels of trust among citizens, greater homicide rates, more discrimination against women and ethnic minorities, higher rates of anxiety and depression, shorter life expectancies, poorer access to healthcare and legal remedies for wrongs, and so on. Not only civic friendship, then, but also our basic personal wellbeing is at stake here. Behold the fruits of inequality, and judge accordingly.

Maybe I’m missing something, but it doesn’t seem possible that income inequality—at least of the type the authors are discussing—could be the cause of these social ills.

Take, for example, the claim (attributed to Charles Murray) that “the vast material inequalities between the upper and lower classes have created vast cultural divisions too, one of the consequences of which is that friendship across classes has become less common.” When exactly was “friendship” between the top of the upper classes and the bottom of the lower classes common? When was the last time in American or European history when the extravagantly wealthy and the impoverished ran in the same social circles? You would have to go back, I suspect, at least a century or two to find such interactions. And where was the last place we could find widespread “power equality?” The Garden of Eden?

And why does it make sense to compare the wealth of the top 1% with those of us on the lower rungs of the economic ladder? Like most people in the middle-class I don’t have much interaction with millionaires, much less the ultra-rich. The gap between my measly wealth and the average millionaire is considerable enough that we won’t have occasion to bump into each other. While they are having filet mignon at the Four Seasons, I’m having chicken fried steak at Cracker Barrel.

Why then does it matter if their income doubles, triples, or even quadruples? How would I even notice? Does the fact that they can now afford to fly to Toyko for a Kobe steak really affect my life? If so, how? Will I be more likely to commit murder because their income has increased?

I also don’t understand why we look to the top economic tier to find income inequality when most of us are as likely to be causing income inequality as Warren Buffet. Consider, for instance, that in 2012 the poverty level for a family of two in the U.S. is $15,130. In contrast, the median household income from 2006-2010 was $51,914. In other words, the median household (and if you can afford to spend your free time reading blog posts about economics, that is probably you) earns more than three times the income of those in poverty. Indeed, America is so rich that even our poor get to be the cause of global income inequality: Those in poverty in the U.S. typically earn approximately forty times more than the world’s poorest citizens.

Why doesn’t it bother us that the guy in line at Starbucks (the one with the MBA) makes three times as much as the barista serving his coffee (the one with the Medieval Lit degree)? With such income inequality right in front of us, why do we focus instead on issues like CEO pay? If income inequality truly erodes “civic friendship,” why aren’t we focusing on the economic gaps between those who will actually come in contact with each other?

Joe Carter
Joe Carter is a Senior Editor at the Acton Institute. Joe also serves as an editor at the The Gospel Coalition, a communications specialist for the Ethics and Religious Liberty Commission of the Southern Baptist Convention, and as an adjunct professor of journalism at Patrick Henry College. He is the editor of the NIV Lifehacks Bible and co-author of How to Argue like Jesus: Learning Persuasion from History's Greatest Communicator (Crossway).